Litigious Times Call for Outside Counsel — and Cutting Costs

From intellectual property rights and patents to workplace complaints and contract disputes, lawsuits can derail even the most promising entrepreneurial endeavor or the most established corporation. It’s simply the nature of the beast in the 21st century. In fact, according to one source, more than 100 million cases are filed against businesses in U.S. courts every year. Sixty percent of those are related to contract disputes, while tort cases — including employment discrimination and wrongful death suits — make up another 11 percent of the overall cases.

But the threat of being sued or getting caught up in a legal tangle shouldn’t dissuade businesses from executing on their strategy or mission. Instead, a measured, strategic approach, as well as partnering with outside legal counsel, can keep solid businesses on the right path. That prospect might sound like a spendy and complicated one, especially for a small startup, but it doesn’t need to be.

Putting the power of technology to work, tech firms are increasingly coming up with ways to streamline the collaborative process between clients and outside counsel. They’re also devising ways to help businesses — including law firms themselves — to manage their costs and maximize relationships for the good of both parties.

Legal frenzy

If it seems like there are simply more lawsuits involving businesses than there used to be, it’s probably because there are. According to the 2016 Litigation Trends Annual Survey from Norton Rose Fulbright, which surveys hundreds of corporate counsel to get their perspectives on the legal climate each year, companies feel like they are facing an increasingly litigious environment. That includes more disputes over regulatory, labor and intellectual property matters, as well as more class actions. In 2016, 6 percent more organizations had been sued than in 2015, and almost a quarter of respondents said they anticipated facing more legal disputes in the future.

“The volume — that is the issue we see the most,” one respondent noted, “both in terms of the amount of disputes and the value of them.”

But it’s not just large corporations that are feeling the legal pinch. Small businesses, too, face plenty of litigation. A few years ago, Bolt Insurance Agency released statistics showing that 57 percent of lawsuits brought against businesses involve companies with less than $1 million in revenue, and one out of every three small business owners has either been sued or threatened with a lawsuit.

Climbing costs, lawyering up

The legal costs involved can be staggering, especially for small businesses. Some estimates suggest that small business owners in the United States pay more than $20 million a year to address tort liability claims, and on average, businesses earning $1 million a year spend about $20,000 fighting or settling frivolous lawsuits.

Beyond litigation matters, legal costs also pile up for businesses simply through necessity. Businesses hire attorneys to tend to a range of matters, from determining the best structure for a startup business to patent issues, buying or selling large assets or drafting contracts and other important documents. Having legal counsel to help with issues like these and, of course, any litigation that may arise, can be crucial in ensuring the success of a business. And it’s important for businesses to bring in a lawyer early on to avoid potential problems in the future. As one saying goes, if you’re being sued, it’s too late.

Businesses often fear what hiring an attorney is going to cost — and many don’t understand how attorneys charge. For some simple business procedures, lawyers will often charge a flat fee. Hourly arrangements are the most common, though some business will also hire lawyers on a retainer basis, whereby a sum is placed into a trust account and drawn down as the attorney provides services.

Monitoring costs, and also maintaining a collaborative, cooperative relationship with outside counsel ensures that a business is not only spending wisely, but also that the attorney and client are working together to reach the most positive outcome. It can be difficult, however, for a client to keep proper tabs on outside counsel if the right systems aren’t in place.

Tech time

That’s where technology is coming into play more and more.

E-billing software helps streamline payments and monitor compliance, but other technology is taking it a step further in many different ways. Portland, Oregon startup Three Matts Inc. devised

an app called Tali that works with Amazon Voice Technology to help attorneys and other professionals accurately track their billable hours. The app tracks billable time based off what a user tells it, then follows up with daily, weekly and monthly emailed summaries. The idea is that vocally tracking hours is much more seamless and doesn’t interrupt workflow.

Another company, Ireland-based BrightFlag, offers a technology platform that legal departments can use to streamline everything from billing and invoice review to pricing analytics. It’s designed to help businesses not only drive savings, but also improve efficiencies and reporting abilities.

Such advances are making it easier for businesses to keep their legal costs in check — and their relationships with their outside counsel in good standing. Both are likely to be crucial, as all signs seem to suggest that business litigation and legal costs won’t be dying down anytime soon.

Sean McWilliams is a Trade Development Executive at Enterpriser Ireland, the Irish government agency for the promotion of international trade by Irish companies. In his role McWilliams works with Enterprise Ireland’s client companies, supporting them to access market opportunities, build global sales and develop their business in the USA.